Ramesh Chander Vashisth vs Chief General Manager, State Bank ...
2002 Latest Caselaw 7 Del

JUDGMENT

D.K. Jain, J.

1. Rule.

2. With the consent of counsel for the parties the petition is being disposed of at this stage itself.

3. The petitioner, an employee of State Bank of India, respondent No. 1 herein, has filed this writ petition under Article 226 of the Constitution of India seeking a writ of certiorari, calling for the records of the disciplinary proceedings held against him and quashing of order dated 8 August, 1994, whereby the appellant authority, respondent No. 2 herein, has directed that by way of penalty the petitioner be "brought down by one stage in the basic pay in the time scale". He also seeks a writ of mandamus directing respondent No. 2 to give effect to the order of his promotion dated 1 November 1992, with all consequential benefits.

4. The petitioner was appointed as Rural Development Officer on 21 April 1973 at Bulandshahar. Subsequently he was transferred to Kapashera branch, New Delhi in July 1981, where he took charge some time in August 1982. In June 1989, nearly four years after petitioner's transfer from Kapashera branch, a study of advances given by the said branch was conducted as it was noticed that the bank had performed poorly. On the basis of the said study on explanation was called from the petitioner by the Regional Manager. The petitioner furnished his reply on 21 July 1989. However, not satisfied with the explanation, Departmental inquiry was ordered against him, by issuing charge sheet vide memo dated 13 July 1990, for commission of alleged misconduct. The charge-sheet contained eight imputations. On conclusion of the inquiry proceedings the inquiry officer held that out of eight imputations three were proved, three more were partly proved and the remaining two were not proved. Agreeing with the findings of the inquiry officer the disciplinary authority found the petitioner guilty of committing the following lapses:

(1) He recommended for sanction of an A.T.L. for Rs. 2,850/- to Shri Ram Singh for purchase of a buffalo. The Installments were not being received regularly. He did not initiate legal action against the borrower and the outstanding went up to Rs. 7,912.25.

(ii) He granted a loan of Rs. 3,000/- to Shri Mahender Singh for purchase of a buffalo. The borrower expired and the documents became time-barred during his incumbency. He failed to get the documents revived well in time and did not take suitable steps to initiate legal action against the borrower/guarantors.

(iii) He did not conduct pre-sanction survey in respect of 14 accounts wherein he granted/recommended loans. He failed to file suits against these borrowers.

(iv) He granted a loan of Rs. 75,000/- to Shri Pradeep Khanna, resident of Janpura Extension (New Delhi) for purchase of a mini bus and did not obtain prior administrative clearance from his controlling authority for financing beyond the area of operation of the Branch.

(v) He granted a loan of Rs. 1,42,000/- to Shri Ashok Kumar for purchase of truck whereas Shri Kumar was already granted cash credit limit of Rs. 8,000/-. Both these accounts were running irregular. As both the activities ursued by the borrower were unconnected making supervision difficult, he should not have granted second loan without seeking approval from his controlling authority.

(vi) He granted a cash credit limit of Rs. 20,000/- to M/s. Tarun Electrical contractors for the electric shop, while a buffalo loan for Rs. 4,000/- granted to the firm was already running irregular. The outstanding in Cash Credit Account went up to Rs. 61,601.00."

5. The appointing authority, accordingly, accepted the recommendations of the disciplinary authority and imposed penalty of "reduction in basic pay by two stages in the time scale" on the petitioner. Aggrieved, the petitioner preferred appeal to the appellate authority. Accepting the stand of the petitioner with regard to the extent of loss which bank might have suffered, the appellate authority broadly agreed with the findings recorded by the disciplinary authority. However, noticing that irregularities were procedural in nature and no malafides could be attributed to the petitioner as also the fact that the loss likely to be suffered by the bank was only, marginal, the appellate authority held that the ends of justice would be adequately met if the aforenoted penalty is imposed on the petitioner.

6. The petition is resisted by the respondents by filing affidavit in reply. By way of preliminary submissions it has been explained that the petitioner who was MMGS-II, and was officiating on the post of MMGS-III, was due for promotion for MMGS-III withe effect from 1 August 1988. While the petitioner did not qualify for selection for the years 1988 to 1990, he was considered for promotion with effect from 1 November 1991 and the result in respect of the interview was kept in a sealed cover as the disciplinary proceedings were pending against him. The petitioner was again called for promotion in the year 1992 and inadvertently his result was declared vide letter dated 6 November 1992 and on the error coming to light, a show cause notice was issued to the petitioner asking why the promotion letter be not withdrawn. It is pointed out that in view of the order of the appellate authority petitioner was finally brought down by one stage in time scale in 1994 and he has become eligible for promotion only with effect from 1 November 1995. On merits the decision of the appellate authority is sought to be supported.

7. I have heard learned counsel for the parties. Though initially Mr. Kavin Gulati, learned counsel for the petitioner had raised the issue of legality of retrospective withdrawal of letter of promotion dated 6 November 1992, but during the course of hearing he did not press the same. However, in support of the submission that the penalty order is unsustainable, learned counsel has vehemently urged two points, namely,

(i) even assuming all the imputation against the petitioner to be correct, no case of "misconduct" could be made out against him as admittedly the petitioner has not been found guilty of committing the alleged acts with malafide or ill motive and (ii) punishment imposed is excessive and disproportionate to the alleged misconduct committed by him particularly when the penalty imposed is likely to have cascading effect on his promotions. In support of his first proposition, reliance is placed on the decisions of the Supreme Court in Union of India and Ors. v. J. Ahmed , State of Punjab and Ors. v. Ram Singh Ex-Constable , D.D. Choudhari v. H.I. Kalyani , Zunjarrao Bhikaji Nagarkar v. Union of India and Ors. and a decision of the Calcutta High Court in Dipankar Sengupta v. United Bank of India and Ors. 1998 (79) FLR 212.

8. Mr. Sanjay Kapur, learned counsel for the respondents, on the other hand, has submitted that since it has been found by the disciplinary authority as well as appellate authority steps to ensure and protect the interests of the Bank, in terms of Rule 32(4) of the State Bank of India (Supervising Staff) Service Rules (for short 'the service rules'), it was a clear case of misconduct. It is also contended that keeping in view the fact that the petitioner has been found guilty of some charges, it cannot be said that the impugned punishment is excessive. In support of the first contention, learned counsel has placed reliance on decision of the Supreme Court in Disciplinary Authority-cum-Regional Manager and Ors. v. Nikunja Bihari Patnaik . Heavily relying on the decisions of the Apex Court in B.C. Chaturvedi v. Union of India and Ors. , Nikunja Bihari Patnaik (supra) and Apparel Export Promotion Council v. A.K. Chopra , it is also urged that the scope of judicial review in disciplinary proceedings being very limited it is not a fit case where this Court should interfere, particularly when the punishment imposed is not such, which would shock the conscience of the Court.

9. Thus, the first and the foremost question that arises for consideration in the instant case is whether the petitioner could be said to have committed any misconduct on the basis of the findings returned by the inquiry officer?

10. The term "misconduct" has not as such been defined in the service rules. However, Rule 48 of the service rules provides that breach of any of the provisions of these rules shall be deemed to constitute misconduct punishable under Rule 49, which in turn provides for imposition of minor and major penalties, prescribed there under, for act of misconduct. Rule 32(4) requires that every employee shall, at all times, take all possible steps to ensure and protect the interests of the bank and discharge his duties with almost integrity, honesty, devotion and diligence and do nothing which is unbecoming of bank official. In this view of the matter, it will have to be ascertained as to what constitutes misconduct in the context of disciplinary proceedings, especially when the said deeming provision applies equally to both minor as well as major penalties.

11. In J. Ahmed's case (supra) dealing with All India Service (Conduct) Rules, 1954 and some other Central rules, similar in substance to Rule 58 of the Service Rules and taking note of the dictionary meaning of the word misconduct, the Apex Court observed as under:

"It is, however, difficult to believe that lack of efficiency or attainment of highest standards in discharge of duty attached to public office would ipso facto constitute misconduct. There may be negligence in performance of duty and a lapse in performance of duty or error of judgment in evaluating the developing situation may be negligence in discharge of duty but would not constitute misconduct unless the consequences directly attributable to negligence would be such as to be irreparable or the resultant damage would be so heavy that the degree of culpability would be very high. An error can be indicative of negligence and the degree of culpability may indicate the grossness of the negligence. Carelessness can often be productive of more harm than deliberate wickedness or malevolence."

12. In Ram Singh's case (supra) again the Supreme Court while observing that the "misconduct" is not capable of precise definition and receives its connotation from the context, said that mere error of judgment, carelessness or negligence in performance of the duty is not misconduct.

13. Similarly, in the case of Dipankar Sengupta (supra) heavily relied upon by learned counsel for the petitioner, a Division Bench of the Calcutta High Court, headed by S.B. Sinha, J (as his Lordship then was), dealing with the case of a bank employee placed in a similar situation, said that some sort of ill-motive or bad motive is an essential ingredient in imputing misconduct unto an individual.

14. At this stage, however, it would be necessary to notice the decision of the Supreme Court in the case of N.B. Patnaik (supra), heavily relied upon by counsel for the respondents. In the said decision, dealing with regulations 24 and 3(1) of the Central Bank of India Officer Employees' (Discipline and Appeal) Regulations 1976, which are pari materia to Rule 48 and Rule 32(4) of the service rules respectively, the Supreme Court observed that breach of regulation 3 is misconduct within the meaning of regulation 34. It was further observed that every officer/employee is supposed to act within the limits of his authority and that acting beyond one's authority is by itself breach of discipline and normally breach of regulation 3. It constitutes misconduct within the meaning of regulation 24. No further proof of loss is really necessary.

15. Thus, from the aforenoted decisions, it would appear that the word "misconduct" is a relative term, incapable of a precise definition and has to be construed with reference to the subject-matter and the context wherein the term occurs, having regard to the scope of the Act or Stature, which is being construed. It has been held that in the context of disciplinary proceedings against a person in public office, a mere negligence in performance of duty or lack of efficiency or attainment of highest standards in the discharge of duties would not constitute misconduct, unless the act complained of arises from an ill-motive. However, it seems that in the case of an employee of a bank, the Supreme Court in case of N.B. Patnaik (supra) has carved out a distinction to hold that since the employees of the bank deal with public funds, any indiscipline on their part cannot be condoned on the specious ground that it was not actuated by ulteriro motives or by extraneous considerations. It may be noted that in N.B. Patnaik's case (supra) the earlier decision in J. Ahmed's case (supra) was not noticed by the Apex Court, though the provision under consideration in that case was almost similar to that in N.B. Patnai's case.

16. In view of the clear observations of the Apex Court in N.B. Patnaik's case, a later decision, to the effect that failure to observe the prescribed norms and discipline by any official/employee amount to breach of regulation 3 and it cannot be condoned on the ground that it was not actuated by ulterior motives, I find it difficult to accept the argument of learned counsel for the petitioner that the said decision is based on its own peculiar facts and may not be applied. I, therefore, reject the first contention of learned counsel for the petitioner.

17. Now I take up the second contention of learned counsel for the petitioner with regard to proportionality of the punishment awarded to the petitioner. It is well settled that the disciplinary authority and on appeal, the appellate authority being fact finding authorities, are invested with the discretion to impose appropriate punishment keeping in view the magnitude or gravity of the misconduct and the High Court, while exercising the power of judicial review, cannot normally substitute its own conclusion on penalty and impose some other penalty. However, irrationality and perversity are recognised grounds of judicial review. Similarly, the doctrine of proportionality is also part of the concept of judicial review. If the punishment imposed is so disproportionate to the offence as to shock the conscience of the Court, the Court may appropriately mould the relief either directing the disciplinary/appellate authority to reconsider the penalty imposed or to shorten the litigation, it may itself, in exceptional and rare cases, impose appropriate punishment with cogent reasons in support thereof (See : B.C. Chaturvedi v. Union of India and Ors. and Zunrajrao Bhikaji Nagarkar v. Union of India and Ors. .

18. Therefore, the question for consideration is whether the punishment awarded in the instant case can be said to be excessive or disproportionate so as to shock the conscience of the Court? I feel that the issue can best be considered in the light of the relevant service rule providing for imposition of penalties. The rule reads as under:

"49. Without prejudice to any other provisions contained in these rules, any one or more of the following penalties may be imposed on an employee, for an act of misconduct or for any other good and sufficient reasons:-

Minor Penalties:

(a) censure;

(b) withholding of, increments of pay with or without cumulative effect;

(c) Withholding of promotion;

(d) Recovery from pay or such other amount as may be due to him of the while or part of any pecuniary loss caused to the Bank by negligence or breach of orders.

Major Penalties:

(e) reduction to a lower grade or post, or to a lower stage in a time scale;

(f) compulsory retirement;

(g) removal from service;

(h) dismissal."

19. The rule does not specify as to what kind of misconduct is to be visited with a minor or major punishment. The service rules only fix the gradation of the punishment but evidently leave the discretion in this regard to the disciplinary authority an din appeal to the appellate authority. Since the service rules enumerate and list out various punishments by way of minor and major penalty and the effect of both the penalties is materially different, the provision casts a duty on the authority concerned to record its reasons while awarding a particular punishment, more so when a major penalty is proposed. Recording of reasons would otherwise be necessary because unless the reasons are indicated, the higher authority cannot find out as to what weighed with the concerned authority to inflict a particular punishment. Needless to say that a penalty has to be commensurate with the gravity of the misconduct for that any penalty disproportionate to the gravity of the misconduct would be violative of Article 14 of the Constitution of India, warranting interference by this Court.

20. In the instant case, it would appear that both the authorities below have failed to consider the said aspect of the matter in its correct perspective. As noticed above, though the appellate authority has come to the conclusion that the irregularities committed by the petitioner were of procedural nature and that no malafides could be attributed to him as also the loss likely to be suffered by the bank was only marginal but the penalty order does not indicate as to why the appellate authority still chose to impose a major penalty on the petitioner. As noted above, the service rules do not specify as to which kind of misconduct would attract a minor penalty. Therefore, while imposing a major penalty the order of punishment must indicate that the authority concerned has applied its mind on the question of punishment, although no detailed reasons are required to be assigned. In my view, in the present case the appellate authority has failed to address itself to the question as to whether in view of his aforenoted findings about the nature of irregularity and the conduct of the petitioner a major penalty was still called for. This, I feel, amounts to non-application of mind on the part of the disciplinary as well as appellate authority, vitiating the order of punishment.

21. Under the circumstances, I am of the opinion that the matter deserves to be sent back to the appellate authority for fresh decision on the question of appropriate punishment in the light of his own finding about the conduct of the petitioner. Accordingly, to that extent the rule is made absolute. The writ petition is allowed to the extent that the appellate authority shall consider afresh whether, in the facts and circumstances of the case, a minor penalty would suffice. Order in this behalf shall be passed as expeditiously as practicable but not later than eight weeks of the receipt of this order. There will, however, be no order as to costs.